For many professionals, business travel used to come with certain perks — a posh hotel, a lavish meal, minibar raids and maybe a pay-per-view movie before bed. But, with hotel rates skyrocketing and companies clamping down on spending, business travel is becoming increasingly bare-bones, even a tinge humiliating. These days, it can sometimes resemble college-dorm living, involving roommates, cooking your own meals and crashing on a friend’s couch.
When Nathan Ayer, a project manager at Linckia LLC, a venture-development firm based in Burlington, Vt., travels to New York for business, he skips a hotel altogether and stays with his girlfriend’s family in East Islip, Long Island, making the one-and-a-half-hour commute into Manhattan by train. He does this with the encouragement of his boss, company president Scott Hardy, who often bunks at a friend’s apartment in Greenwich Village (where he usually sleeps on a sofa) when he travels to Manhattan for work. “You’ve got to walk the walk,” he says.
While companies long have been slashing costs on air travel, forcing employees to fly coach and take cheaper connecting flights, comfortable hotel stays, until recently, were still usually a given. Now, corporate cost-cutting efforts include everything from pushing employees to share hotel rooms to installing software that encourages travelers to choose cheaper digs.
The Virginia Community College System says it pays for two nights of lodging for employees who double up in rooms when attending professional-development conferences; those who choose to go solo must pay for one of the nights themselves. At Bayer AG, the German pharmaceutical company, a booking tool encourages employees to choose the least-expensive hotel by allowing the employer to rank the options, says Paul Lang, Bayer’s manager of travel services. If employees don’t pick the most affordable choice, they have to choose a reason explaining why from a drop-down box. Honeywell International Inc. has switched to more limited-service hotels such as Courtyard by Marriott and Holiday Inn from full-service Marriott, Hilton, and Hyatt hotels in cities employees travel to most often.
Indeed, more companies are banning stays in expensive boutique hotels. This year, more than 76 percent of employers say they are booking fewer luxury hotels in favor of midclass properties, according to the National Business Travel Association survey of 1,800 corporate travel managers.
This is happening as travel costs rise — particularly hotel rates, which are up 19.2 percent in the U.S. since the end of 2004. Spurred by strong demand, average daily rates grew 7.2 percent last year and are projected to rise another 6 percent this year, according to Smith Travel Research, making this the fourth straight year of significant growth. In some cities, rates are up even more. Denver rates are up 11.4 percent this year versus last year, according to Smith Travel, while New York rates are up 10.6 percent. Midweek rates at the W New York Times Square, for example, start at $399 the last week of July, before taxes.
But the budget moves can instill a bit of hotel shame in some business travelers. Indeed, some flee their low-cost digs first thing in the morning, heading to plusher — and more conveniently located — hotels for meals and business meetings. On a trip to Baltimore in October, Heman Bhojwani, managing partner of Earthly Gourmet Distribution LLC, an organic-food distributor in Portland, Ore., stayed at an airport hotel (the Four Points by Sheraton BWI Airport, which starts at $190 in late July). But he met with colleagues at the Hyatt Regency Baltimore (which starts at $359 a night). Breakfast at the Hyatt, which offers crab-cake benedict and smoked salmon, was a clear step up from the Four Points’ fare, Bhojwani says. “It wasn’t just scrambled eggs and bacon,” he says.
Companies also are trying to manage the cost of traveling abroad, where hotel rates are sometimes even frothier than they are here. London’s rates are up 30.3 percent this year compared with last year in U.S. dollars. Mumbai, India, has seen a 48.8 percent rise over that same period and Singapore has climbed 32.9 percent. Indeed, rates for the entire Asia/Pacific region, according to Smith Travel, are up 13.1 percent. Trilogy Inc., a technology firm in Austin, Texas, rents an apartment in Bangalore, India, where two or three employees make business trips each month. The company began renting the apartment in 2004 because of escalating hotel rates in the city, says travel manager Sue Nelson.
Other companies are turning to teleconferencing to cut travel costs. GMAC Mortgage, a subsidiary of GMAC Financial Services, has increased its use of teleconferencing to cut down on employee business trips. The company now uses teleconferencing and Web conferencing for 75 percent of its training. Previously, the company would fly its employees and trainers to one location to do the training face to face, says Terri Lewis, vice president of training for consumer services at GMAC Mortgage.
Perhaps most annoying for employees are new policies requiring travelers to share rooms on some trips. Matt Simmons of London had to bunk with a colleague during a corporate conference in Orlando late last year. Although he had no complaint with his roommate — they got along OK, and they mostly came and went at different times — the lack of privacy irked him. “When you get back to your room, you want to crash out, walk around in your shorts, watch the wonders of 150 channels of American TV and not be polite to somebody you don’t know,” says Simmons, who worked for a U.S.-based health-care-technology firm.
Some companies even want their employees to cook. When Ryan McGovern had to go to Milwaukee for a three-month trip late last year, he booked a room at a Residence Inn and thought he’d gotten a good deal, since the length of his stay meant there would be no occupancy tax. But his employer, AccSys Technology Inc., an ion-linear-accelerator company in Pleasanton, Calif., had a further money-saving idea: Since his hotel room had a kitchen, he could make his own meals –and thus would receive only two-thirds the normal per diem. “I was like, ‘Thanks for nothing,’” he says.
McGovern left the company in April, saying that the firm’s penny-pinching — when other AccSys employees passed through town, McGovern says he had to bunk up — was one factor that led to his departure. AccSys Chief Operating Officer Gerard Goldner says he can’t comment on the posture of previous management; he became operating chief on June 1, well after McGovern’s trip occurred.
Travelers used to boutique hotels — and their 400-thread-count sheets — can have a tough time adjusting to budget-hotel living. When she travels for work, Jennifer Jones, a marketing and communications manager in Chicago, usually stays at luxury boutique hotels such as Kimpton Hotel & Restaurant Group LLC’s Alexis Hotel in Seattle, where rooms are $389 a night. But for a recent conference, her employer put her up at the Sheraton New York Hotel & Towers, since it was more cost-effective for a group of employees. Her room, she says, “was coffin-sized.” There were no drawers to store her clothes, and the decor seemed outdated. “I’m used to having a big fluffy bed, not the same bed that’s been there since 1974,” she says. Some business travelers, however, take pride in their low-cost hotels. Ellen Pishenin, a regional sales manager in Weston, Mass., for Liberty Mutual Group, often stays at the Holiday Inn Express Midtown-Fifth Avenue in Manhattan, where there’s no room service and rates run as low as $209. Pishenin used to stay at the boutique Muse Hotel near Times Square but switched because of the Holiday Inn’s rates. “The corporate culture has changed to the degree that there’s acknowledgment and respect for people who are expense-conscious.”
That particular Holiday Inn Express, which opened a year and a-half ago, has a client list that also includes Marsh & McLennan Cos. “People are looking for a clean room, strong shower and a quick checkout,” says Robbie Wilson, New York City manager for Magna Hospitality Group LC, which owns the hotel.
Employees - even prospective employees - may just have to get used to company cost cutting. Richard Heath of Bethesda, Md., who works for a consulting company (whose name he didn’t want revealed), says that when his firm interviewed him in January, it said it would reimburse no more than $500 of the cost of the flight. But he couldn’t find a nonstop flight for under $500, he says, because he had just three days to book the trip. So he woke up at 4 a.m. and flew from Columbus, Ohio, through Chicago to Washington for his noon interview, and wound up having to call the company to push back the appointment two hours because of flight delays. “That’s the last thing you need before an interview,” he says.